Forex: Japan’s Merchandise Trade Balance falls in March

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By S. Nicholas

Japan’s Ministry of Finance released the country’s Merchandise Trade Balance figures for March, which indicate a fall in exports by 2.2 percent compared to a year earlier. This was the first annual decline in 16 months, after an earthquake, tsunami and nuclear crisis damaged factory output and crippled supply chains.

The decline in exports was worse than the expected 1.5 percent annual decline and followed a 9.0 percent rise in the year to February. Data showed that automobile exports in particular were affected, underlining the extent of the damage wrought by the disaster on March 11.

Meanwhile, imports rose 11.9 percent in the year to March, more than a 6.0 percent rise that was forecast, compared with a revised 10.0 percent increase in February. The trade balance was a surplus of 196.5 billion yen (USD2.38 billion). That compared with the median forecast for a surplus of 493.6 billion yen.

Economists predict Japanese exports are likely to decline in the near future which could push the country’s trade balance into a deficit as companies struggle to cope with a shortage of electricity and parts needed to manufacture their goods.

The cost of material damage alone from last month’s quake and tsunami has been estimated at USD300 billion, making it the world’s most costly natural disaster. About 14,000 people have been confirmed dead and tens of thousands made homeless.

After the release of the news, USDJPY jumped by 14 pips, peaking at 82.86. EURJPY rose almost 20 pips to hit a high of 119.05.